Question 1

Events that could have a positive impact on organizational objectives:
A)controls
B)fraud
C)opportunities
D)profit

Accepted Answer

Opportunities present the possibility of achieving organizational objectives and can have a positive impact on the organization. Controls, fraud, and profit are not necessarily positive or negative on their own and their impact would depend on specific circumstances.

Question 2

The ERM framework addresses four categories of management objectives.Which category of objectives concerns laws and regulations?
A)compliance
B)operations
C)reporting
D)strategic

Accepted Answer

The category of objectives that concerns laws and regulations is compliance.

Question 3

The section of Sarbanes Oxley that prohibits a CPA firm that audits a public company from engaging in certain non-audit services with the same client is:
A)Title I - Public Company Accounting Oversight Board
B)Title II - Auditor Independence
C)Title III - Corporate Responsibility
D)Title IV - Enhanced Financial Disclosures

Accepted Answer

Title II of Sarbanes Oxley outlines provisions for auditor independence, including prohibitions on certain non-audit services that a CPA firm can provide to the same public company that they audit. This includes services like bookkeeping, financial information systems design, and expert services unrelated to the audit. The aim is to prevent conflicts of interest and maintain the integrity of financial reporting.

Question 4

Risk assessment is best described by:
A)Internal and external events affecting achievement of an entity's objectives must be identified, distinguishing between risks and opportunities.
B)Management selects whether to avoid, accept, reduce, or share risk - developing a set of actions to align risks with the entity's risk tolerances and risk appetite.
C)The entirety of enterprise risk management is monitored and modifications made as necessary.
D)The likelihood and impact of risks are analyzed, as a basis for determining how they should be managed.

Accepted Answer

Risk assessment involves analyzing the likelihood and impact of risks in order to determine how they should be managed. Option A describes the initial step in the risk management process, option B describes risk response planning, and option C describes risk monitoring and communication.

Question 5

The section of Sarbanes Oxley that requires each annual report filed with the SEC to include an internal control report is:
A)Title I - Public Company Accounting Oversight Board
B)Title II - Auditor Independence
C)Title III - Corporate Responsibility
D)Title IV - Enhanced Financial Disclosures

Accepted Answer

The section of Sarbanes Oxley that requires each annual report filed with the SEC to include an internal control report is Title IV - Enhanced Financial Disclosures. This section aims to improve the accuracy and completeness of disclosures made by public companies, and mandates that companies report on their internal controls over financial reporting.

Question 6

Which component of the ERM framework is best described here: Management selects whether to avoid, accept, reduce, or share risk - developing a set of actions to align risks with the entity's risk tolerances and risk appetite.
A)control activities
B)event identification
C)risk assessment
D)risk response

Accepted Answer

This best describes the risk response component of the ERM framework, where management selects how to respond to identified risks by avoiding, accepting, reducing, or sharing them. Control activities pertain to the policies and procedures implemented to mitigate risks, event identification refers to the process of identifying potential events that could affect the organization, and risk assessment involves analyzing and evaluating the impact and likelihood of identified risks.

Question 7

The section of Sarbanes Oxley that requires a company's CEO and CFO to certify quarterly and annual reports is:
A)Title I - Public Company Accounting Oversight Board
B)Title II - Auditor Independence
C)Title III - Corporate Responsibility
D)Title IV - Enhanced Financial Disclosures

Accepted Answer

Title III of Sarbanes Oxley is Corporate Responsibility, which outlines the responsibilities of a company's executive management team in ensuring the accuracy and completeness of financial reports. Section 302 of Title III requires the CEO and CFO to certify in writing the accuracy of financial reports filed with the SEC, including quarterly and annual reports.

Question 8

The section of Sarbanes Oxley that requires financial analysts to properly disclose in research reports any conflicts of interest they might hold with the companies they recommend.:
A)Title V - Analysts Conflicts of Interests
B)Title VIII - Corporate and Criminal Fraud Accountability
C)Title IX - White-Collar Crime Penalty Enhancements
D)Title XI - Corporate Fraud and Accountability

Accepted Answer

Title V - Analysts Conflicts of Interests is the section of Sarbanes Oxley that requires financial analysts to properly disclose any conflicts of interest they might hold with the companies they recommend. This section aims to eliminate any potential biases that might influence an analyst's research report on a particular company.

Question 9

This component of the ERM framework concerns the entirety of enterprise risk management and is accomplished through ongoing management activities, separate evaluations, or both.
A)control activities
B)monitoring
C)objective setting
D)risk response

Accepted Answer

Monitoring is the ongoing process of tracking and assessing the effectiveness of the overall ERM framework. It involves reviewing internal and external factors that may impact the organization's objectives and risk profile, evaluating the effectiveness of risk responses, and ensuring that the framework is operating as intended. Control activities and risk response are specific components of the ERM framework, while objective setting is a foundational element that supports the entire ERM process.

Question 10

Events that could have a negative impact on organizational objectives:
A)controls
B)embezzlement
C)fraud
D)risks

Accepted Answer

The answer of Events that could have a negative impact...

Question 11

Approvals, authorizations, verifications, reconciliations, reviews of operating performance, security procedures, and segregation of duties are examples of:
A)control activities
B)event identification
C)monitoring
D)risk response

Accepted Answer

The given activities are all examples of control activities, which are the policies and procedures implemented by management to ensure that business objectives are achieved and risks are mitigated. Event identification refers to the process of identifying potential risks and events that could impact the organization, monitoring refers to the ongoing evaluation of control processes and risk management, and risk response refers to the actions taken to address identified risks.

Question 12

The ERM framework addresses four categories of management objectives.Which category ensures the reliability of the financial statements?
A)compliance
B)operations
C)reporting
D)strategic

Accepted Answer

The reporting category in the ERM framework ensures that the financial statements are reliable and accurate. The compliance category focuses on adhering to laws and regulations, the operations category focuses on efficiency and effectiveness in operations, and the strategic category focuses on the organization's long-term goals and objectives.

Question 13

The major reasons for exercising control of the organization's business processes include:
A)to provide reasonable assurance that the goals of the business are being achieved
B)to mitigate risks of fraud and other intentional and unintentional acts
C)to provide reasonable assurance that the company is in compliance with applicable legal and regulatory obligations
D)all of the above

Accepted Answer

All of the given reasons are major factors behind exercising control of the organization's business processes. By undertaking such control measures, a company can ensure that its business goals are being met, risks of fraud and other harmful acts are minimized, and compliance with legal and regulatory obligations are being maintained. Overall, these reasons contribute to the effectiveness and efficiency of a company's operations.

Question 14

This component of the ERM framework encompasses the tone of an organization and sets the basis for how risk is viewed and addressed by an entity's people, including risk management philosophy and risk appetite, integrity and ethical values.
A)control activities
B)internal environment
C)risk assessment
D)risk response

Accepted Answer

The internal environment component of the ERM framework includes the organization's tone, risk management philosophy, and values. It sets the foundation for how risk is perceived and addressed by the entity's people. Control activities pertain to specific actions taken to mitigate risk, risk assessment involves identifying and analyzing potential risks, and risk response deals with decisions on how to manage identified risks.

Question 15

Which component of the ERM framework is best described here: Internal and external events affecting achievement of an entity's objectives must be identified, distinguishing between risks and opportunities.Opportunities are channeled back to management's strategy or objective-setting processes.
A)control activities
B)event identification
C)risk assessment
D)risk response

Accepted Answer

This statement describes the event identification component of the ERM framework. The component involves identifying both internal and external events that could affect the achievement of an entity's objectives while distinguishing between risks and opportunities. Opportunities identified are then channeled back to management's strategy or objective-setting processes. Control activities involve policies and procedures put in place to mitigate risks, risk assessment involves evaluating the likelihood and impact of identified risks, and risk response involves deciding on the appropriate actions to take in response to identified risks.

Question 16

Who is legally responsible for establishing and maintaining an adequate system of internal control?
A)the board of directors
B)stakeholders
C)investors
D)management

Accepted Answer

Management is legally responsible for establishing and maintaining an adequate system of internal control, as they are the ones who have direct control and oversight over the organization's operations. The board of directors, stakeholders, and investors also have a role to play in promoting a strong system of internal control, but they are not legally responsible for its establishment and maintenance.

Question 17

The effect of an event's occurrence is:
A)control
B)impact
C)risk
D)opportunity

Accepted Answer

The effect of an event's occurrence is its impact, which refers to the consequences or effects that the event has on various aspects of the situation. Control, risk, and opportunity are all related to events, but they do not directly describe the effect that an event has.

Question 18

The ERM framework addresses four categories of management objectives.Which category addresses the effective and efficient use of resources?
A)compliance
B)operations
C)reporting
D)strategic

Accepted Answer

The operations category of management objectives addresses the effective and efficient use of resources. Compliance refers to adherence to laws and regulations, reporting focuses on accurate and timely communication of information, and strategic objectives relate to the achievement of an organization's goals and objectives.

Question 19

The ERM framework is comprised of eight components.Which component includes the policies and procedures established and implemented to help ensure the risk responses are effectively carried out?
A)control activities
B)event identification
C)risk assessment
D)risk response

Accepted Answer

Control activities refer to the policies and procedures established and implemented to help ensure the risk responses are effectively carried out. Event identification refers to the process of identifying potential risks, risk assessment involves evaluating the identified risks, and risk response includes developing a strategy to manage the risks.

Question 20

The section of Sarbanes Oxley that establishes an independent board to oversee public company audits is:
A)Title I - Public Company Accounting Oversight Board
B)Title II - Auditor Independence
C)Title III - Corporate Responsibility
D)Title IV - Enhanced Financial Disclosures

Accepted Answer

Title I of the Sarbanes-Oxley Act establishes the Public Company Accounting Oversight Board (PCAOB), which is an independent board that oversees public company audits to ensure they are conducted in a fair and unbiased manner. The PCAOB is responsible for setting auditing standards, inspecting audit firms, and disciplining auditors who violate professional standards.

Quiz 7: Controlling Information Systems: Introduction to Enterprise Risk Management and Internal Control

Events that could have a positive impact on organizational objectives:

The ERM framework addresses four categories of management objectives.Which category of objectives concerns laws and regulations?

The section of Sarbanes Oxley that prohibits a CPA firm that audits a public company from engaging in certain non-audit services with the same client is:

Risk assessment is best described by:

The section of Sarbanes Oxley that requires each annual report filed with the SEC to include an internal control report is:

Which component of the ERM framework is best described here: Management selects whether to avoid, accept, reduce, or share risk - developing a set of actions to align risks with the entity's risk tolerances and risk appetite.

The section of Sarbanes Oxley that requires a company's CEO and CFO to certify quarterly and annual reports is:

The section of Sarbanes Oxley that requires financial analysts to properly disclose in research reports any conflicts of interest they might hold with the companies they recommend.:

This component of the ERM framework concerns the entirety of enterprise risk management and is accomplished through ongoing management activities, separate evaluations, or both.

Events that could have a negative impact on organizational objectives:

Approvals, authorizations, verifications, reconciliations, reviews of operating performance, security procedures, and segregation of duties are examples of:

The ERM framework addresses four categories of management objectives.Which category ensures the reliability of the financial statements?

The major reasons for exercising control of the organization's business processes include:

This component of the ERM framework encompasses the tone of an organization and sets the basis for how risk is viewed and addressed by an entity's people, including risk management philosophy and risk appetite, integrity and ethical values.

Which component of the ERM framework is best described here: Internal and external events affecting achievement of an entity's objectives must be identified, distinguishing between risks and opportunities.Opportunities are channeled back to management's strategy or objective-setting processes.

Who is legally responsible for establishing and maintaining an adequate system of internal control?

The effect of an event's occurrence is:

The ERM framework addresses four categories of management objectives.Which category addresses the effective and efficient use of resources?

The ERM framework is comprised of eight components.Which component includes the policies and procedures established and implemented to help ensure the risk responses are effectively carried out?

The section of Sarbanes Oxley that establishes an independent board to oversee public company audits is: